Argentina’s debt swap proposal to bondholders is imminent

Argentina’s debt restructuring proposal to international creditors is imminent.

The government has filed a statement with the US Securities and Exchange Commission saying it intends issue bonds worth US$50.5 billion as part of its debt swap offer. Argentina’s official proposal to bondholders will be on the table once registration of the document is confirmed, Perfil reported Wednesday.

The government has been thin on details about its offer, but Economy Minister Martín Guzmán has said previously that Argentina will seek a grace period for interest payments, offer longer maturities, lower coupons and potentially, seek a haircut.

A source in the Economy Ministry told Reuters on Tuesday that an offer would likely be delivered tomorrow. “They don’t think it will be tomorrow, it’s more likely on Thursday. But for sure it will be this week,” the unnamed official told the news agency.

Argentina is seeking to restructure close to US$70 billion in debt issued in foreign currency. The Alberto Fernández administration says the country, which has been in recession for two years, cannot pay until it returns to growth. It originally planned to present an offer to creditors on March 31, but those efforts were curtailed by the coronavirus pandemic.

President Fernández said in an interview with Perfil and Net TV this weekend that Argentina would make an offer “in the next few days.” He has repeatedly said that the outcome of talks must produce a sustainable repayment scheme for the country, echoing language used by the International Monetary Fund.

Argentina is in talks to renegotiate US$68.8 billion in international debt with private creditors and officials say they want to avoid a costly default, even after the government extended quarantine measures until April 26 to halt the spread of coronavirus.

GDP is expected to contract by 5.7 percent this year, according to IMF estimates.

Presentation

The presentation before the US Securities and Exchange Commission (SEC) was delivered on behalf of the government by Adrián Nador, an economist and diplomat who is in charge of business at the Argentine Embassy in Washington.

The request for authorisation to issue the bonds was copied to Andrés de la Cruz, a partner at the law firm Cleary Gottlieb Steen & Hamilton LLP, an expert in the field who is based in New York.

In the text presented to the SEC, the government makes it clear that its debt swap offer is imminent, saying that the start date for the proposed sale of bonds is “after this registration statement comes into effect."

Perfil reports that the registration statement contains a prospectus, consisting of a cover page, a table of contents, pages numbered from 1 to 37 and a back cover. It concerns securities with a maximum total principal amount of US$51,652,645,202, or its equivalent in one or more currencies or currency units, which may be offered and sold in the United States.